Revised Route Dispersal Guidelines in India

The Ministry of Civil Aviation released the revised Route Dispersal Guidelines (RDG), in continuation of what was stated in the National Civil Aviation Policy (NCAP) of 2016. The order, dated 8th August 2016, is available on the website of the ministry.

Another suggestion of having the routes revised every 3 years has been modified to review the routes every 5 years, making it easier for the airlines to plan.

India continues to be one of the few countries where airlines have to fly on certain routes without any incentives for the same. Many countries worldwide, notably UK, Australia and Canada have systems in place to incentivize or subsidize airlines to fly to remotely connected or unconnected routes. Some of these ideas have been considered for the formation of UDAN – The regional connectivity Scheme.

New Guidelines

In the revised Route Dispersal Guidelines, there would now be 20 city pairs which will form part of Category – I. This is an increase from the existing 12. Flying distance of more than 700 kms, average seat factor of over 70% and annual traffic of 5 lakh passengers over two full schedules (one year) is the criteria for any route to be Category – I route. None of the category II routes will get converted to I, only Category III routes can be converted to Category I.

The existing list of 12 routes in Category I increase to 20. The effective addition is 10 routes, since two from the existing list are dropped.

The requirement for Category II and IIA routes continues as before, which is 10% and 1 % of ASKMs of Category I to be deployed on Category II and IIA respectively.

The requirement of deployment on Category III is reduced from 50% of Category I ASKMs to 35%. As per the DGCA data released for October, Vistara deploys 63.3% ASKMs on Category III while AirAsia deploys 363% ASKMs on Category III. Market leader IndiGo deploys 145.3%.

All airports in Uttarakhand and Himachal Pradesh are now part of Category II. While Uttarakhand has Dehradun and Pantnagar as operational airports, Himachal Pradesh has Kullu and Dharamshala.

Revision in Route Dispersal Guidelines – What goes Out

The most surprising route in the existing RDG has been Mumbai – Trivandrum. The sector sees minimal flights and that is probably because of the traffic pattern and not because of its inclusion in Category I. The route has been dropped in the new guidelines, most probably because it does not satisfy the traffic criteria.

The only other route to be dropped is Mumbai – Hyderabad, where the aerial distance is less than 700kms. IndiGo with 8 frequencies each way and Jet Airways with 7 frequencies each way would benefit the most from it. The benefit, however, does not help since a whole new set of routes which were hitherto in Category III get included in Category I.

Revision in Route Dispersal Guidelines – What comes in

The new routes which are classified as Category I effective Winter Schedule of 2017 are

Bengaluru – Pune

Delhi – Patna

Mumbai – Kochi

Mumbai – Chandigarh

Mumbai – Lucknow

Delhi – Ahmedabad

Mumbai – Jaipur

Delhi – Goa

Delhi – Pune

Chennai – Pune

Pune, Patna, Kochi, Chandigarh, Lucknow, Ahmedabad, Jaipur, Goa are new cities which have made it to the list for specific routes. Of the list, Pune, Patna, Chandigarh and Goa are considered congested and have restrictions of some sort or another. While Pune, Chandigarh and Goa are defense airports with restrictions on operational hours, Patna is a difficult airfield to operate.

The chart below denotes the two way frequency of each airline on each sector

Who is impacted the most & what to expect as a consumer

By virtue of being the largest carrier IndiGo would be the most impacted by this move, followed by Jet Airways. A quick glance at frequencies as of date on the routes which form part of the new Route Dispersal Guidelines shows that on all but two routes, IndiGo has the maximum frequencies. Smaller airlines like AirAsia & Vistara which hitherto had limited presence on Category I routes will suddenly find a large portion of their ASKMs get converted to Category I. Go Air will also be one of the impacted airlines, since currently they have 38 frequencies a day on Category I routes which will almost double up by Winter 2017.

The revision will see a lot of network changes from the airlines to accommodate the requirement. Time will tell how airlines adjust to the guidelines.

From the consumer perspective these could be good times for people from the North East as Delhi – Guwahati will continue to be one of the most popular routes in Category II. Tourism to Port Blair could increase as routes connecting Port Blair are long enough for higher ASKMs. Airlines like IndiGo could start Delhi – Port Blair non-stop service.

As always the consumer will be the king in over capacity as prices will have to be dropped to attract passengers.

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